James Hardie blames poor manufacturing performance for downturn in first quarter earnings

Despite a strong lift in revenue, James Hardie earnings for the first quarter went backwards.

AAP: Dean Lewins, file photo

Building materials manufacturer James Hardie has blamed a poor manufacturing performance for a downturn in first quarter earnings.

Investors punished the controversial group this morning after chief executive Louis Gries also admitted the company overestimated the strength of the recovery in the American housing market, with the share price plunging 7 per cent in early trading to $13.10 after recovering from as low as $12.83.

Despite a strong lift in revenue, which surged 12 per cent, earnings for the first quarter went backwards, easing to $US50.1 million from $US52 million previously.

When asbestos compensation payments are taken into account, net profit dropped 80 per cent to $US28.9 million.

"Manufacturing's the biggest gap in our result this quarter," Mr Gries told analysts on a conference call.

Along with increased competition, Mr Gries conceded the group miscalculated the extent to which the rebound in American housing would impact on demand for the company's products.

"I think if we would have handled things better on the manufacturing side and anticipated the volume a little bit differently ... it's very easy to see where $US8 million would be on the bottom line, and I wouldn't be upset with the result to the same degree I am now," he said

"In fact, I wouldn't be upset with it at all."

Mr Gries was less than upbeat about the company's prospects.

"We’re not expecting a much better housing opportunity," he said.

"There’s still some forecasters out there indicating that all of a sudden a bunch of houses are going to get built and the year's going to come out fairly close to what they originally forecast.

"We're not believing that so that’s not in our forecast."

While sales are improving in Australia and New Zealand, most of James Hardies' revenue comes from the US and Europe.